Employers forcing people to retire to cut staff costs

As many as 100,000 were told by their boss they no longer had a job last year because they had reached the default retirement age of 65.

It is a sharp increase of four times as much the previous year, when 25,000 people were forced to retire, according to the data compiled by Age Concern and Help the Aged.

Older workers can still be forced to retire, although the issue is currently being reviewed by the Government.

The existing default retirement age is widely regarded as unsustainable as many older people want to work longer, to earn additional income to boost their pensions and because their health allows them to continue.

But abolishing the default retirement age would prove a headache to companies who rely heavily on it to remove older workers who they feel are no longer adding value to the business.

Michelle Mitchell, a director at Age Concern and Help the Aged, said: “Our survey clearly shows the use of forced retirement has spiralled out of control, offering some employers a low-cost shortcut to shed jobs during the recession.

“The Default Retirement Age has stamped an expiry date on hundreds of thousands of older workers. It’s the most disturbing example of age discrimination which still tarnishes later life for so many people.”

The current rules clash with the Government’s policy to raise the age when men and women can claim a state pension, which is increasing to 66 in 2024, to 67 in 2034 and 68 in 2044, with each rise being phased in over two years.

Women are required to work for 39 years to qualify for a full state pension – currently at £95.25 a week - while men must work for 44 years to qualify, with both levels dropping to 30 years from April.

Economists called for the state pension age to be raised even higher – to 70 – to help pay for state pensions, reduce the public debt and reflect people living longer.

John Hawksworth, head of macroeconomics at PricewaterhouseCoopers, said: “The sweet spot enjoyed by the economy during the past 30 years as the post-war baby boomers moved through the workforce has the potential to turn sour as longer periods of retirement leave a lasting and expensive burden on smaller future generations of workers.

“Either taxes will have to rise or other policies need to adjust to deal with the higher costs of state pensions, health and long-term care, as well as the large debt hangover from the global financial crisis.”